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Inclusive Communities Project, Inc. v. Lincoln Property Co.

United States District Court, N.D. Texas, Dallas Division

July 13, 2017

THE INCLUSIVE COMMUNITIES PROJECT, INC., Plaintiff,
v.
LINCOLN PROPERTY COMPANY, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          ED KINKEADE, UNITED STATES DISTRICT JUDGE

         Before the Court are Defendant Brick Row Apartments LLC's Motion to Take Judicial Notice of Certain Data Produced by the U.S. Census Bureau (Doc. No. 14), and Defendant Brick Row Apartments LLC's Rule 12(b)(6) Motion to Dismiss (Doc. No. 15). Plaintiff The Inclusive Communities Project, Inc. (“ICP”) brought this lawsuit against Defendant Brick Row Apartments LLC (“Brick Row”) and other Defendants -Defendant Lincoln Property Company, Defendant Legacy Multifamily North III, LLC, Defendant CPF PC Riverwalk LLC, and Defendant HLI White Rock LLC - alleging that Defendants' practice of refusing to rent to or negotiate with Section 8 housing voucher holders constitute violations of the disparate impact and disparate treatment standard under the Fair Housing Act, 42 U.S.C. 3601, et. seq.

         Defendant Brick Row contends that this Court should dismiss Plaintiff ICP's Complaint as to Defendant Brick Row.

         After careful consideration of the motions, the response to Defendant Brick Row's motion to dismiss, the reply to Plaintiff ICP's response to Defendant Brick Row's motion to dismiss, the supporting appendices, and the applicable law, the Court GRANTS (1) Defendant Brick Row Apartments LLC's Motion to Take Judicial Notice of Certain Data Produced by the U.S. Census Bureau, and (2) Defendant Brick Row Apartments LLC's Rule 12(b)(6) Motion to Dismiss. Plaintiff ICP's disparate impact and disparate treatment claims against Defendant Brick Row are dismissed. Plaintiff ICP's Complaint is dismissed as to Defendant Brick Row.

         I. Factual Background

         This case is about Defendant Brick Row's and the other Defendants' practice of refusing to participate in the federal Housing Choice Voucher Program, commonly known as the “Section 8” housing voucher program. This practice of refusing to rent to or negotiate with Section 8 housing voucher holders is alleged to be implemented by Defendants in high opportunity, predominantly White, non-minority areas of the Dallas, Texas metropolitan area. Defendant Lincoln Property Company manages all of the Defendants' rental properties, including Defendant Brick Row's apartment complex in Richardson, Texas, Brick Row Urban Village. Plaintiff ICP asserts in its Complaint (Doc. No. 1) Defendants' practice of refusing to rent to or negotiate with Section 8 housing voucher holders is discriminatory since African American or Black families are the predominant participants in the Section 8 housing voucher program.

         a. Plaintiff ICP and the Section 8 Housing Voucher Program

         Plaintiff ICP is a nonprofit organization that seeks to create and maintain racially and economically inclusive communities. Plaintiff ICP pursues expansion of fair and affordable housing for low income families and attempts to remedy harmful practices that perpetuate discrimination and segregation in the community. As part of Plaintiff ICP's fair housing focused initiative, Plaintiff ICP provides counseling, financial assistance, and other services for low income families. Plaintiff ICP helps low income families obtain housing in higher opportunity areas that have lower poverty rates, higher median family incomes, and higher ranking public schools.

         One of the main tools that Plaintiff ICP helps its client use to achieve housing equality is the federal Section 8 housing voucher program. Plaintiff ICP's Section 8 housing voucher clients are predominantly African American or Black families. The Section 8 housing voucher program is a subsidy provided to landlords who are willing to rent dwelling units to low income households. The Section 8 housing voucher program is the largest national rent assistance program for low income households. The subsidy from the program given to the landlords pays the difference between the rental amount and the amount that the voucher household is required to pay under the Section 8 housing voucher program, which ranges between 30% and 40% of the household's income. Landlord participation in the Section 8 housing voucher program is voluntary rather than mandatory.

         Predominantly African American or Black families obtain and use Section 8 housing vouchers. The Dallas Housing Authority administers the largest number of Section 8 housing vouchers of any agency in the Dallas, Texas metropolitan area. Out of the 17, 000 plus vouchers Dallas Housing Authority issues, 86% of the voucher holders are alleged to be African American or Black families, and 6% are non-minority families. According to the U.S. Housing & Urban Development Department (“HUD”) 2015 statistics, of the 30, 745 Section 8 housing voucher population served by all of the housing authorities in the Dallas-Plano-Irving TX Metropolitan Division, African American or Black families are alleged to make up 81% of the voucher population, Hispanic families are alleged to make up 6% of the voucher population, and White non-Hispanic families are alleged to make up 10% of the voucher population. According to the U.S. Office of Management and Budget, the city of Richardson, Texas, where Brick Row Urban Village is located, is included in the Dallas-Plano-Irving TX Metropolitan Division.

         Plaintiff ICP advises, counsels, and seeks to provide financial assistance to African American or Black families that participate in the Section 8 housing voucher program administered by the Dallas Housing Authority. For example, Plaintiff ICP provides mobility assistance to all Section 8 voucher households that want to move to higher opportunity communities in the Dallas area. Mobility assistance involves Plaintiff ICP negotiating with landlords on behalf of its Section 8 voucher clients, if necessary.

         Plaintiff ICP also provides financial assistance to its Section 8 housing voucher clients. Plaintiff ICP offers incentive payments, to serve as a sublessor, or to serve as a third party guarantor to encourage landlords to participate in the Section 8 housing voucher program. The incentive payments Plaintiff ICP offers to landlords are for the purpose of alleviating possible business concerns that landlords might have when renting to Section 8 housing voucher households. Plaintiff ICP sent letters to Defendant Lincoln Property Company attempting to encourage Defendant Lincoln Property Company to accept Section 8 housing vouchers for properties it manages - Parkside at Legacy, Park Central at Flower Mound, White Rock Lake Apartment Villas, McKinney Uptown, and Brick Row Urban Village (owned by Defendant Brick Row). In the letters to Defendant Lincoln Property Company, Plaintiff ICP proposed participation in Plaintiff ICP's Third Party Guarantor Program or Sublease Program.

         b. The Brick Row Urban Village Apartment Complex and Its Section 8 Policy

         Defendant Brick Row owns the Brick Row Urban Village apartment complex in Richardson, Texas. Tenants began to be occupy Brick Row Urban Village in April 2010. Defendant Brick Row's apartment complex is located in one of eight census tracts in the 75081 zip code. Brick Row Urban Village has 500 rental units. Plaintiff ICP alleges that black renters entail 11% of the 532 rental dwelling units in the census tract where the Brick Row Urban Village apartment complex is located. In the census tract where Brick Row Urban Village is located, there are 45 voucher households available according to the HUD 2015 statistics. The majority of Section 8 voucher households in the census tract where Brick Row Urban Village is located are alleged to be in single family or semi-detached structures, and not in apartment complexes. In the 75081 zip code, which has eight different census tracts, there are 301 Section 8 housing voucher households available, according to the HUD 2015 statistics. In the city of Richardson, Texas there are 376 Section 8 housing voucher households available, according to HUD 2015 statistics. The HUD user dataset, provided by Defendant Brick Row in the appendix to its motion to dismiss (Doc. No. 17), which Plaintiff ICP does not object to the Court considering (Doc. No. 21), conveys the usage and availability of subsidized housing in the city of Richardson. The HUD dataset reflects that as of April, 17, 2017, 376 Section 8 housing units were available in the city of Richardson and that 90 percent of the available Section 8 voucher households in the city of Richardson were occupied. The HUD dataset also reflects that 68 percent of voucher holders in the city of Richardson are Black or African American households.

         Defendant Lincoln Property Company manages the Brick Row Urban Village apartment complex for Defendant Brick Row. Defendant Lincoln Property Company is the property manager for all of the Defendants that are parties to this lawsuit. The Defendants' properties, which are alleged to be in high opportunity, predominantly White non-minority, areas, are alleged to have adopted and implemented the practice of their property manager Defendant Lincoln Property Company of refusing to participate in the Section 8 housing voucher program. Plaintiff ICP alleges that Defendant Lincoln Property Company states in its advertisements in a variety of ways that its communities, including Brick Row Urban Village, will not accept Section 8 housing vouchers. The advertisements by Defendant Lincoln Property Company state that

• Our community is not authorized to accept housing vouchers;
• Our community is not authorized to accept Section 8 housing;
• Our community is not authorized to accept any government subsidized rent programs;
• No 2nd chance leasing, and no vouchers accepted.

         In March 2016, Defendant Lincoln Property Company's President and Chief Executive Officer received a letter regarding the Brick Row Urban Village apartment complex from Plaintiff ICP encouraging Defendant Lincoln Property Company to reconsider its position of not accepting Section 8 housing vouchers. Plaintiff ICP noted in the letter that it “is a local non-profit entity that works with families using a housing voucher to rent housing in high opportunity areas of the Dallas Metroplex.” The letter also described how Plaintiff ICP offers incentive payments to encourage landlords to rent to its Section 8 voucher clients, and Plaintiff ICP's Third Party Guarantor Program and Sublease Program.

         For the Third Party Guarantor Program that Plaintiff ICP offered, Plaintiff ICP proposed to serve as the third-party guarantor for its Section 8 voucher clients using the standard Texas Apartment Association Lease Contract Guaranty Form. Plaintiff ICP represented that it would be willing to add provisions to the Lease Contract Guaranty form to cover any losses due to possible housing authority delays in processing the Section 8 housing voucher of the voucher household. An incentive payment of one month's rent for each Section 8 housing voucher tenant selected to be a tenant at Brick Row Urban Village was also offered to Defendant Brick Row if it participated in the Third Party Guarantor Program.

         Plaintiff ICP alternatively offered a Sublease Program to try to entice Defendant Brick Row to rent to its Section 8 voucher clients. Plaintiff ICP began the proposal by stating that the President of the Apartment Association of Greater Dallas endorses the merit of the Sublease Program and has offered to work with Plaintiff ICP. Defendant Brick Row would still ultimately make the decision of whether to rent to the Section 8 housing voucher tenant. The responsibility of finding and proposing qualified Section 8 voucher tenants to Defendant Brick Row would fall solely on Plaintiff ICP. For the Sublease Program, Plaintiff ICP would lease three to five units in the Brick Row Urban Village apartment complex. As a sublessor, similar to the role of a corporate entity, Plaintiff ICP would pay the agreed lease amount in a timely manner, respond to all tenant issues, and, if necessary, evict the respective Section 8 housing voucher tenants. If the Section 8 Voucher Program tenant, or the housing authority responsible for the subsidy to the landlord was late or delinquent on the rent payment, Plaintiff ICP offered to cover the unpaid portion of the payment under the lease contract. Plaintiff ICP also offered a financial incentive of one month's contract rent for each unit that Defendant Brick Row would agree to lease to a Section 8 Housing Voucher tenant.

         Defendant Brick Row contends that it did not know of the contents contained in this letter or receive any communications from Plaintiff ICP until the filing of this lawsuit in January 2017. In its motion to dismiss, Defendant Brick Row states that, “Brick Row never received any communications from ICP prior to January 23, 2017 when the lawsuit was filed.” Defendant Brick Row's agent, Defendant Lincoln Property Company, however, received the letter regarding the Brick Row Urban Village apartment complex from Plaintiff ICP. Neither Defendant Lincoln ...


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